MINUTES Tuesday, October 3, 2017
Informational City Council Meeting 4 PM
Carnegie Town Hall
Sioux Falls City Council 235 West 10th Street
Members Present: Christine M. Erickson, Michelle Erpenbach (arr. 4:02
p.m.), Greg Neitzert, Rex Rolfing, Marshall Selberg, Pat Starr, Theresa Stehly,
Mike T. Huether
Members Absent: Rick Kiley
1. Call To Order
Council Vice-Chair Christine M. Erickson called the meeting to order at 4 p.m.
2. Urbanized Development Commission (UDC)
A. Thursday, September 21, 2017
Jim David, Operations Manager, stated that the UDC approved a letter in support
of a Federal grant for Tea to reconstruct Heritage Parkway and approved the
2018 - 2021 Transportation Improvement Plan.
3. City Council Open Discussion
Council Member Pat Starr discussed meetings he and Council Member Theresa
Stehly attended with two neighborhood groups, Norton Acres and the Oakview
Neighborhood. The Norton Acres meeting included approximately 35 residents who
discussed their decision making process as it relates to whether they are zoned
appropriately or not. Representatives from Code Enforcement, Planning, Police,
and Fire Rescue were also in attendance. Members of the Administration were
also in attendance at the Oakview meeting.
Council Member Rex Rolfing noted City Attorney Dave Pfeifle's new job and
thanked him for his service to the City.
4. Presentations
A. Events Center Settlement Agreement by City Administration
Presentation: Approximately 30 minutes followed by discussion
Mayor Mike T. Huether opened the presentation by providing an overview of the
intent of the presentation which included answering questions provided by the
Council and from the media; and answering additional questions by the Council
based on the presentation. City Attorney Dave Pfeifle discussed: who is at fault,
the need to hire an expert, legal fees, and whether the public would see the Judd
Allen Group report. Mark Cotter, Director of Public Works, explained why the
siding was not replaced, the risks associated with replacing the siding today,
and the system's warranty. Tracy Turbak, Director of Finance, explained: the
composition of the $1 million settlement, who paid cash to the City, why the City
released money under the agreement, where the cash received by the City went, and
how the money has been/ will be used to include projects completed and projects
in progress or upcoming. Karen Leonard, Deputy City Attorney, discussed: the cost
to replace the siding, why the City Council was not included in the negotiations,
the actual amount of the construction manager's contingency remaining at the end
of the project before and after the settlement, and whether the City of Sioux
Falls counted money that already belonged to the taxpayer as part of the $1
million amount. Huether explained: why the City of Sioux Falls agreed to the
settlement, why the agreement was confidential, why the City told citizens it was
a $1 million settlement, and the options available three years ago.
Council Member Marshall Selberg asked what the cost to replace the siding today
would be; Cotter provided an approximate value based on work to the west side
of the building. Selberg further asked what the City saved from the settlement;
Pfeifle explained types of legal fees that were avoided by not entering into
litigation. Selberg also asked what could have been done differently; Huether
discussed the need to provide information sooner, the complexity of the
settlement process as it relates to risks and rewards, the impact of the
settlement on current Events Center operations, and the challenge of
construction projects; Pfeifle explained why private entities desire
confidential settlements.
Council Member Theresa Stehly thanked citizens who attended or are watching the
meeting. She explained that the public deserves to know what is going on in
City government, where tax dollars are spent and about projects and contracts.
She discussed the lack of information provided to the Council and public by
providing examples and noting discussions held with the Council in July, 2014.
She recommends that an independent audit take place to determine what steps
should be taken next. She asked why we didn't have a more stringent warranty.
Cotter explained the 3-year installation and 20-year finish warranties.
Council Member Greg Neitzert asked for clarity on Section 5.2.1 of the contract
with Mortenson; Leonard explained the meaning of the section and the meaning of
Section 13.7 in the General Conditions which addresses latent defects. Neitzert
asked whether the City would be able to have the contractor fix problems with
the panels or the roof in the future; Leonard explained that no parties agreed
to waive any claims for latent defects that may be discovered during the 10-
year period.
Council Member Pat Starr asked "what was settled" as part of the agreement.
Pfeifle discussed the arena roofing membrane warranty and resolution of the
Events Center siding aesthetic issue. He explained the meaning of latent
defects and protections the statute of repose provides. Starr further asked
what the $1 million is for. Cotter explained why it can be said the panels are
structurally sound and why it is an aesthetic issue. The settlement was a
financial contribution used for purposes other than to fix an aesthetic issue.
Starr asked for clarity about the decision to not release the Judd Allen Group
decision. Pfeifle discussed why the Group was first consulted and retained and
why a final report was not compiled. He also addressed the nature of the draft
report and state law on the release of draft reports. Starr noted that the
report is the one outside opinion which can show whether the siding is
structurally sound.
Neitzert asked for clarification on the decision to not release the draft report.
Pfeifle reiterated the state statute. Neitzert showed the invoice from Judd Allen
and asked for clarification about "e-mail on corroding edges" and in what form the
preliminary report was in. Pfeifle noted it was an attachment.
Stehly asked Pfeifle if he's heard any statements from the Administration during
the meeting that were inaccurate. He indicated "no." She also asked the Council to
consider an independent auditor to determine what has taken place.
Selberg asked if another settlement would be required for a latent defect and
if it would be prorated. Leonard stated that contract terms and law would be
followed to resolve issues.
Council Member Rex Rolfing commented on news coverage of the settlement,
information provided by Council Members, the Judd Allen report, and the
potential impact of the Supreme Court's decision.
Erickson asked whether latent defects are always in Construction Manager At Risk
(CMAR) contracts. Leonard stated it is in CMAR contracts. Erickson asked whether
or not we had to bring Mortenson into the lawsuit. Leonard noted that our
contract was with Mortenson, not the subcontractors; the construction management
contingency, according to the contract, could also be used to correct the work of
their subcontractors. Erickson also asked if we used "value siding." Cotter
explained the Full Enclosure Study; he also noted the desire for an attractive
and functional building exterior along with an enhanced spectator experience
inside. Erickson and Cotter also discussed the use of contingency funds for fan
enhancements. Erickson also referenced the Judd Allen report and urged that it be
released. Huether emphasized the need to move forward, the success of the Events
Center, and that the City can provide additional assurance that the siding is
structurally sound.
Starr stated that the Council needs to determine the next steps and suggested
that leadership work with the Administration to conduct a follow-up. Erickson
stated she will discuss next-steps with Council Chair Rick Kiley and
recommended that Council Members re-submit their questions if they were not
addressed. Stehly stated her support for a follow-up meeting.
Council Member Michelle Erpenbach also agreed with having a follow-up meeting
or working session and also recommended the Administration post a question and
answer webpage.
5. Adjournment
Council Vice-Chair Christine M. Erickson adjourned the meeting at 5:40 p.m.
Thomas M. Greco
City Clerk